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Dec 10

Is It Illegal to Keep Large Amounts of Cash at Home?

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Is keeping cash at home illegal?

Well, there are no rules regarding saving a small or large stash of cash at home. However, doing so isn’t actually a good idea due to a variety of reasons that you should be concerned about. Choosing to save money at home is not a new or bad practice, but the amount of cash you put under the mattress is the key point here.

Keeping a small sum of cash at home holds certain benefits, and most of us do it for whatever purpose. But when it comes to a large amount of money, the risks involved increases tremendously. 

So, before we discuss how much cash you can keep at home and the dangers involved, let’s first see why people choose to save money at home.


Why do some people choose to keep money at home?

There are tons of reasons people opt to save money at home over keeping them in a high-yield savings account at a bank. And so, here are some of the common reasons why they choose to do so:

  • Fear of bank failure

In the past decade alone, we have seen several banks collapse despite things looking stable at the moment. We don’t know what the future holds, but it’s better to keep having some cash at your disposal. 

The United States suffered a huge financial crisis during the 2008 economic recession, which saw several banks file or almost file for bankruptcy. Another good example is what occurred in 2002 when Argentina ordered banks to close after the great economic collapse of Argentina. Financial institutions aren’t immune to collapse, which means if this happens, you may not have access to your bank account. A list published on bankrate.com shows how many banks have failed from 2009-2021.

Therefore, we can simply understand why people choose to keep large amounts of cash at home by looking at these. 

  • Fear of negative interest rates

We are all aware that saving money in a bank means your money will gain a specific amount of interest after a certain period. But do you know your saving can experience a negative interest? 

Negative interest rates are a rare phenomenon, but it may happen, and this means rather than your money earning interest, you will be paying the bank to hold your money. 

  • To have emergency Funds

Having some money at your disposal at all times is part of being prepared for any contingency. It doesn’t matter whether that emergency is big or small; what matters is having some cash at your reserve. We cannot only rely on accessing our funds electronically because sometimes that may not be possible.

Cash on hand gives you a sense of security and preparedness, and that’s why most people choose to keep money at home. The president and an investment advisor representative for Mainstay Financial Group, Annalee Leonard, even noted that; “banks and ATMs may not be up and running for days after a strong storm. I recommend my clients have three to five days’ worth of spending money, just in case.”

  • For small purchases

This is another incentive that contributes to why we may choose to keep a large stash of cash at home. Most of us prefer to make small purchases in cash rather than electronic payments. One reason is that it reduces identity theft.


With that said, let’s now move on to the risk associated with keeping a large amount of cash at home.


Why should you not keep a large amount of money at home?

It is advisable to avoid keeping a large stash of cash at home, but why?

Well, here are the main reasons why:

  • Security

A large amount of cash at home poses several security issues not only to your cash but to you as well. If several people happen to know that you have $10,000 stored at home, don’t you think someone may be tempted to sneak in and take some or all? The possibility of that happening is very high.

If you are robbed and your money is taken, then you may end up facing a serious financial struggle. Furthermore, your money won’t be insured, which means you won’t be able to claim insurance. 

  • Cash can be destroyed

This reason is quite a straightforward one.

Cash is tangible, meaning it can be easily destroyed in case of fire outbreaks, earthquakes, or even floods. It doesn’t matter where they are stored, money can still get destroyed. Using a safe doesn’t mean they are secure. The fact is, in case of fire, it can still be incinerated.

  • Cash movement limitations 

Besides security and cash being destroyed, limitation on cash movement is another issue you should be concerned about. You can easily run into a problem with IRS if you choose to take your large sum of cash to the bank. In fact, banks are required to report to IRS on deposits of at least $10,000 or unusual cash deposits patterns.

  • No FDIC insurance cover

FDIC insurance covers money of up to $250,000 in the bank per depositor, per bank. However, for money kept at home, there is no such insurance. If you’ve cash that amounts to more than $250,000, you can simply open different banks accounts in different banks and split your cash such that you can still insure the entire sum.


How much cash can you keep at home legally?

Since there are no rules governing keeping money at home, what actually is a “safe” amount of cash that you can keep at home?

Well, the answer to this question is quite ambiguous. This is simply because each financial advisor has their own recommendations, and it also depends on your expenditure. You could keep an amount that can sustain you for about two weeks to one month. But remember, this recommendation has its own flaws, one of them being the larger the amount you keep at home, the higher the risks.  


Where should you keep large amounts of cash at home?

There are several clever spaces where you can hide your cash, which includes:

  • Securely bolted home safe
  • Besides or inside a fake outlet 
  • Put them on a double Ziplock bag, and then dig a hole in your yard and put the bag there.

You can find other clever hiding spots here.  


Final thought

So, how much money can you keep at home legally? That isn’t defined; it will depend on you.

For other money-related laws, you could check Lawrina.


Disclaimer: MoneyMagpie is not a licensed financial or legal advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial or legal advice. Anyone thinking of investing should conduct their own due diligence.


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